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DOI: 10.24412/2309-4788-2021-5-336-341
Zhang Chunlei - a) 3d year Ph.D. student, Southern Federal University (SFedU); b) Junior fellow, Office of International Exchange and Cooperation, Henan University of Economics and Law, China, [email protected],
Чжан Чуньлэй - a) аспирант 3 года обучения, Южный федеральный университет (ЮФУ); b) Младший научный сотрудник, Управление международного обмена и сотрудничества, Хэнаньскийуниверситет экономики и права, Китай.
ANALYSIS OF THE SUBSTITUTION EFFECT ON EMPLOYMENT AND EDUCATIONAL
NEEDS IN DIGITAL ECONOMY
АНАЛИЗ ВЛИЯНИЯ ЭФФЕКТА ЗАМЕЩЕНИЯ НА ЗАНЯТОСТЬ И ОБРАЗОВАТЕЛЬНЫЕ ПОТРЕБНОСТИ В ЦИФРОВОЙ ЭКОНОМИКЕ
Abstract. The development of the digital economy does not necessarily reduce the size of employment, but rather the substitution effect and the suppression of the substitution effect co-exist, resulting in the digital economy not reducing employment. However, the labor market is characterized by a combination of technological unemployment and competition for talent. On the one hand, technological unemployment includes not only low-education groups but also highly educated people; on the other hand, the competition for talent is not limited to highly educated people, but also to some low-education groups. This has a definite impact on current education. This paper focuses on the substitution effects of the digital economy on employment, and also explains the two-way influence mechanism between the digital economy and education in the context of new employment.
Аннотация. Развитие цифровой экономики не обязательно приводит к сокращению занятости, скорее, эффект замещения и подавление эффекта замещения сосуществуют, в результате чего цифровая экономика не приводит к сокращению занятости. Однако рынок труда характеризуется сочетанием технологической безработицы и конкуренции за таланты. С одной стороны, технологическая безработица охватывает не только группы работников с низким уровнем образования, но и высокообразованных людей; с другой стороны, конкуренция за таланты распространяется не только на высокообразованных людей, но и на некоторые группы с низким уровнем образования. Это оказывает определенное влияние на современное образование. В этой статье основное внимание уделяется анализу влияния эффекта замещения на занятость в цифровой экономике, а также объясняется механизм двустороннего влияния цифровой экономики и образования в контексте новой занятости.
Keywords: digital economy, employment scale, substitution effect, educational needs, employment in the digital economy.
Ключевые слова: цифровая экономика, масштабы занятости, эффект замещения, образовательные потребности, занятость в цифровой экономике.
The epidemic has had a huge impact on the global economy and has widely affected the stability of employment. The digital economy, as a new economic form of the new global technological revolution and industrial transformation, with technological advances represented by artificial intelligence, digitization and the Internet at its core, can provide new opportunities for economic
structural transformation and employment expansion. The development of the digital economy can enhance the competitiveness and literacy of the workforce through digital applications in the field of education and job skills training programs, forming a digital human capital. These facts actualize conducting of research in the relevant subject area.
Current research has found that the digital economy has contradictory findings on employment. Some research findings suggest that the impact of the digital economy on labor demand is complex and can have both substitution and facilitation effects [1]. In terms of substitution, new technological revolutions tend to favor technological advances and therefore reduce the demand for labor accordingly. However, because of this bias towards technology, the structure of the labor force can contribute to an increase in the demand for skilled labor. In addition to the development of the digital economy, employment can be influenced by several macro and micro factors, including the institutional context of economic development, demographic characteristics, household endowments, etc. [2]
The digital economy is a new economic form with digitalization and information as the key production factors, digital technology as the core driving force, and modern information networks as the important carrier, through the deep integration of digital technology and the test economy, constantly improving the digitalization, networking and intelligence of the economy and society, and accelerating the reconstruction of the economic development and governance model [3]. As can be seen from this concept, digital technologies in the digital economy are widely used in all areas of the economy and society and in all sectors to promote economic growth and total factor productivity.
The history of human technology has shown that every technological advance has been accompanied by the rise of some new industries and has had a major impact on some of them. The widespread use of machines has caused the mass bankruptcy of craftspeople, and the development of automation has had a major negative impact on those employed in labor-intensive industries.
According to the concept of economics, unemployment includes structural unemployment, cyclical unemployment, and frictional unemployment [4]. In terms of the negative impact of the digital economy on employment, it is mainly structural unemployment. Structural unemployment is unemployment caused by a mismatch between supply and demand in the labor market if the structure of the economy, including the product structure, changes, which is mainly characterized by many job vacancies requiring job seekers on the one hand, and a relatively serious phenomenon of labor force unemployment on the other. From the perspective of the development of the digital economy, digital technology is widely used in all areas of economic life, and the impact of the digital economy on the manufacturing industry has gradually moved from value reshaping to value creation, providing new ideas and empowering the transformation of the manufacturing industry [5]. The digital economy not only promotes the transformation and upgrading of macro industrial structure, but also has an impact on micro enterprise management, with employment patterns tending to diversify and flexibilization and a series of other changes [6]. All these have exacerbated the risk of structural unemployment. The substitution effect affects structural unemployment in three main ways.
The digital economy does not only have a dampening effect on labor demand, it also has a facilitating effect. Autor found that the digital economy will replace simple, low-skilled labor for programmed tasks, while the demand for unprogrammed, flexible, creative, and abstract high-skilled labor will increase [7]. This was also found in an empirical study by Dauth W. [8], where jobs and wages for high- and low-skilled workers gradually increased, while jobs and wages for medium-skilled workers gradually decreased. The positive effects of the digital economy on employment are mainly the broadening effect, the deepening effect, and the job creation effect.
In terms of the generalization effect, this can be analyzed from both a micro and macro perspective. As the digital economy continues to grow, it generates employment substitution lowering boosted productivity, though lowering production costs. The size of the market expands further, and this expansion in turn drives the demand for employment. Thus, it can be said that the digital economy increases the demand for labor, reduces the price of digital products and increases their production, which leads to an increase in the demand for labor. This is the micro-employment effect of the digital economy. Industries that implement the digital economy offer products and services at
lower prices, increasing the real income of consumers. This in turn increases the demand for other products and services, which in turn contributes overall to the expansion of the national economy as a whole and an increase in employment. This is the macro employment effect of the digital economy. Some studies consider the digital economy as a new economic form after the agricultural and industrial economies, which differs from the traditional agricultural and industrial economies in that its basic elements are digital instead of traditional labor and capital. As a new economic form, the digital economy basically includes many new industries, situations and models, creating a large amount of new demand for labor and compensating for the state of unemployment caused by the structural adjustment of the traditional economic form. Moreover, including e-commerce and new network platforms have created a new demand for labor, which has a large market demand, a wide range of employment and a flexible mechanism.
The deepening effect of the digital economy, due to the massive adoption of information technology products, including the development of artificial intelligence and big data, replaces a large amount of simple labor demand, but will increase the labor productivity of enterprises. Highly productive enterprises can gain access to larger markets and thus drive the demand for labor, especially in the light of the new trade theory, where the market is open and highly productive enterprises can access foreign markets and thus gain larger markets and drive the demand for domestic labor. Historically, industrial technology revolutions, although mostly labor substitution, have often led to increased labor market demand, and technological revolutions have often been accompanied by more new jobs, and the same is true for the digital economy. There are many platform companies in the digital economy, and these platform companies are linked to numerous upstream and downstream industries, creating many jobs in business operations, business training, logistics, payments, and other related industries. There is also flexibility typical of employment in the digital economy, where many jobs are not in the traditional permanent employment system, but rather in the form of flexible employment through assignments (fig. 1).
Figure 1 - The effects of the digital economy on employment [9]
The above analysis shows that the digital economy will have both labor substitution effects in terms of job reduction and employment promotion effects, but not including the broadening and deepening effects. Most studies conclude that the development of the digital economy will not result in a reduction in the size of employment in the short term, but will lead to a change and optimization of the employment structure. Theoretically, the digital economy tends to displace low- and medium-skilled jobs while creating more knowledge- and technology-intensive jobs. This will increase a country's demand for highly skilled people and facilitate the restructuring of the workforce towards higher employment skills, which has led existing relevant empirical studies to focus mainly on the impact of the digital economy on the employment of the workforce with different levels of education.
According to the economics of education theory, an important relationship between education and the economy is reflected in the leading role of education in the economy, which ultimately results in three dimensions: scale, structure, and quality from the point of view of talent develop-
ment. In today's labor market, there is a coexistence of skilled unemployment and competition for talent. On the one hand, technological unemployment is not limited to low-education groups, but also includes highly educated people; on the other hand, the competition for talent is not limited to highly skilled people, but also to some low-education service-oriented groups. In other words, there is a risk of unemployment and undersupply in the digital economy, regardless of the level of skills. This phenomenon reflects two types of divides: the education divide, which is a structural mismatch between the supply of skills trained for education and the skills demanded for jobs when technological development is faster than educational development; and the digital divide, which reflects the difference in the benefits of using digital information and technology between individuals with different levels of education, and the resulting difference in the ability to use digital devices [10].
According to the theoretical study of the economics of education, the level of education of employed people is used as a proxy for skills, and when new changes occur in the economy, there is a mismatch between the level of skills and the demand for education in the job [11]. When workers' skills do not meet the requirements of the job, this is called 'undereducation' and can be a barrier to employment or even to finding low-skilled works [12].
Bils and Klenow suggest that the reverse causality of economic growth on education may be as important as the causality of education on economic growth [13]. In other words, there is a two -way mechanism of influence between the digital economy and education. Following this logic, the relationship between education and the economy is analyzed. Considering that the digital economy is both a factor of production and a knowledge economy, a simple distortion of the relationship between the digital economy and education is shown in Figure 2, with the solid line representing the impact of the digital economy on education, and the dashed line representing education's leadership and service to the digital economy.
Figure 2 - A two-way mechanism for the impact of the digital economy on the future of education [14]
On the demand side, the demand for skilled personnel is a derivative of the development of the digital economy. On the supply side, human capital is the mainstay of technological innovation. There are two types of technological advancement embedded in the digital economy, Skill-biased Technical Change and Task-biased Technical Change. This means that there is not only a demand for skills but also a demand for tasks. The matrix of the fit between the supply of educational personnel and the demand for new technologies under dual conditions is shown in Figure 3, with the horizontal axis representing the degree of match between technology and labor, with the origin being the complete substitution of labor for technology, and the vertical axis representing the degree of substitution to complementarity from left to right; and the vertical axis representing the level of education of individuals from low to high. Quadrant 1 portrays the phenomenon of voluntary unemployment of highly educated people in low-skilled tasks and tasks with high substitutability. Quadrant 2 represents the shortage of highly skilled individuals for creative and situational cognitive jobs where the educational supply is not sufficient. Quadrant 3 portrays the phenomenon of
technological progress in task-changing technologies, but technological unemployment among low-skilled individuals due to insufficient education to complement the technology. Quadrant 4 depicts the crowding out of low-skilled workers by the substitution effect of technology in the process of technological progress. Both highly educated and low-educated people are likely to experience skill mismatch or skill undermatch in the dynamic process of technological progress.
Figure 3 - Shortfall in matching the educated workforce to new technologies [15]
The integration of the digital economy with the real economy, mainly the manufacturing industry, has triggered many organizational, business and model changes, while also forming a large number of emerging areas of talent demand, prompting a structural shortage of high-quality talent to become a key bottleneck limiting the development of integration. At present, most of the talents are distributed in the traditional product development and operation fields, and the total number of professional and skilled talents with in-depth knowledge of industrial big data collection and analysis, advanced manufacturing process and process optimization, digital strategy management and data mining of the whole manufacturing life cycle is still relatively small. At the same time, in emerging fields such as the Internet, big data and artificial intelligence, there is also a serious lack of cross-border talents who have an in-depth understanding of the operational processes and key aspects of the traditional manufacturing industry and who can deeply apply the new generation of information technology in niche vertical fields for digitalization, networking and intelligent transformation.
The increase in the number of years of education per capita in the digital economy will help employment, so it is necessary for the state to take measures in terms of the scale and structure of education training. In terms of the scale of training, the scale of postgraduate studies should be expanded and the proportion of professional masters and professional doctorates should be increased. In addition, improve the workforce's ability to adapt to new technologies and business models, and place emphasis on including digital economy talent and workforce skills that match the development of the industry to meet the diverse needs of the workforce in the digital economy. Various forms of transferable skills training will be provided, an early warning mechanism for industries replacing the workforce in the digital economy will be established, and lifelong training for the workforce will be actively pursued.
If we are to stay ahead of the machines and lead technological progress, education in the future needs to be integrated into the national innovation system, combining the strengths of innovation in universities and companies, and reinventing itself in parallel with technological innovation, in order to maintain the supply of leading knowledge and ensure the scale and quality of the talent
supply. The emphasis on continuing education and lifelong learning is a key element of this technological revolution.
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